Panasonic sees tough year as quake aftermath hampers

By IBT Staff Reporter On 05/20/11 AT 6:16 AM

Japan's Panasonic Corp will have an extremely tough year, with the effects of the devastating March earthquake continuing to hamper sales through September, the head of the electronics giant said on Friday.

The company will also split the 17,000 job cuts it plans by March 2013 in roughly equal proportions between Japanese and foreign operations, President Fumio Ohtsubo told reporters.

He said there were uncertainties over the impact of power shortages in the peak summer months and that he did not see much additional demand for the company resulting from rebuilding efforts in northern Japan.

On April 28, we forecast the disaster would cut first quarter sales by several hundreds of billion yen, Ohtsubo said.

At this point we see it as less, possibly half or a third of what we thought. But the second quarter will not be much better, because of the lingering difficulties with the supply chain.

Although Panasonic factories in northern Japan have been repaired, they are not necessarily operating at full capacity.

Basically, I have the strong sense that the 2011/2012 financial year will be extremely tough, Ohtsubo said.

Last month Panasonic said its operating profit rose 60 percent for the year ended in March, but did not give a forecast for the current year because of a lack of clarity about the impact of last month's devastating earthquake and tsunami, and the continuing nuclear crisis.

Ohtsubo said it was possible the company would offer a full-year forecast along with its first quarter results, which were last year announced at the end of July.

The market consensus is for an operating profit of 273.9 billion yen ($3.4 billion) for the year to March 2012, down about 10 percent on the previous year, according to an average of 21 analysts polled by Thomson Reuters I/B/E/S.

Panasonic, which faces harsh competition from South Korea's Samsung Electronics and LG in its loss-making flat-screen television business, is seeking to shift its focus to environmental and energy-related businesses such as rechargeable batteries.

As part of that strategy, it announced last year it would pay $9.4 billion to make Panasonic Electric Works and Sanyo Electric Co wholly owned units, taking on tens of thousands of additional staff.

It announced in April that it planned to shed at least 17,000 jobs and might close up to 70 factories around the world by March 2013, to cut out overlapping areas, pare costs and keep up with Asian rivals.

Panasonic is keen to integrate businesses including home appliances, air conditioning, projectors and surveillance cameras, as well as head office and back office functions.

Shares in Panasonic fell 0.6 percent to 944 yen on Friday, ahead of the interview's publication, underperforming the broader Nikkei average, which slipped by 0.1 percent.